Feeds

eBay buys PayPal

$1.5bn in stock

  • alert
  • submit to reddit

Internet Security Threat Report 2014

eBay is to buy Paypal, for $1.5bn in stock.

That's sorted then, or it will be when the deal closes at the end of the year. PayPal conducted its IPO in February - four months ago. Surely the point of that exercise was not to sell up so soon? All that expense could have been avoided by going for the trade sale in the first place.

But the capital markets are dead, and PayPal needs eBay - It became the world's biggest web micropayments platform on the back of an exclusive deal with eBay. and 60 per cent of its turnover derives from this auction marketplace. This exclusivity ended earlier this year, and eBay hoovered up stock in Billpoint, a rival payments provider. eBay will now phase out Billpoint at some point.

eBay reckons it can save operational costs by combining the two companies - earnings will be immediately accretive on a pro-forma basis (i.e. with the merger costs stripped out). The company also becomes substantially bigger by gaining control of the online payment system.

PayPal's Q2 turnover is expected to come in at $53-$54m, while eBay's Q2 revenues, announced today, were $266m. GAAP net income was $54.3m on sales up 46 per cent on the same period last year. eBay attributes the growth to the accelerating pace of US transactions.

eBay points to the market opportunities presented by the rest of PayPal's business, but post-acquisition, PayPal's non-eBay turnover may well fall. Its new owner intends to phase out business with gambling sites - 'regulatory uncertainty' is the rationale.

PayPal is a tad controversial - it's got jaw-dropping Ts&Cs and it's not very friendly to people outside the US. Also, there are occasional foul-ups, and several states want much closer scrutiny - if PayPal looks like a bank and acts like a bank, then it should be regulated like a bank. ®

Related stories

PayPal's first day pop
The return of the Internet IPO - PayPal shares soar
PayPal rules the P2P e-payment waves

Choosing a cloud hosting partner with confidence

More from The Register

next story
WHY did Sunday Mirror stoop to slurping selfies for smut sting?
Tabloid splashes, MP resigns - but there's a BIG copyright issue here
Spies, avert eyes! Tim Berners-Lee demands a UK digital bill of rights
Lobbies tetchy MPs 'to end indiscriminate online surveillance'
How the FLAC do I tell MP3s from lossless audio?
Can you hear the difference? Can anyone?
Google hits back at 'Dear Rupert' over search dominance claims
Choc Factory sniffs: 'We're not pirate-lovers - also, you publish The Sun'
While you queued for an iPhone 6, Apple's Cook sold shares worth $35m
Right before the stock took a 3.8% dive amid bent and broken mobe drama
Inequality increasing? BOLLOCKS! You heard me: 'Screw the 1%'
There's morality and then there's economics ...
prev story

Whitepapers

Providing a secure and efficient Helpdesk
A single remote control platform for user support is be key to providing an efficient helpdesk. Retain full control over the way in which screen and keystroke data is transmitted.
Intelligent flash storage arrays
Tegile Intelligent Storage Arrays with IntelliFlash helps IT boost storage utilization and effciency while delivering unmatched storage savings and performance.
Beginner's guide to SSL certificates
De-mystify the technology involved and give you the information you need to make the best decision when considering your online security options.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.
Secure remote control for conventional and virtual desktops
Balancing user privacy and privileged access, in accordance with compliance frameworks and legislation. Evaluating any potential remote control choice.